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D.C. Decides Against Retroactive Virus Insurance Coverage

May 5, 2020, 9:27 PM

The District of Columbia has nixed legislation that would retroactively eliminate virus exclusions in business interruption policies in a win for the insurance industry.

The D.C. City Council on Tuesday decided not to move forward with a retroactive insurance coverage mandate as part of broader coronvirus relief package for closed businesses and others harmed by the coronavirus pandemic.

The Insurance industry has said that retroactive business interruption coverage for businesses shuttered by Covid-19 could potentially bankrupt insurance companies. Because viruses were excluded from coverage, insurance companies have not collected premiums from policyholders to cover payouts.

“It is gratifying to see that common sense prevailed in the D.C. City Council, as members passed coronavirus legislation to aid local residents but removed a business interruption insurance mandate that would have ultimately harmed business policyholders and insurance companies alike in the long run,” Erin Collins, the vice president for state affairs at the National Association of Mutual Insurance Companies, said Tuesday in a statement.

Lawmakers in states including Louisiana, New Jersey, and Ohio are also considering legislation to require retroactive Covid-19 coverage for businesses.

Business owners around the U.S. are suing insurance companies to get business interruption coverage for coronavirus coverage. The restaurant industry has been particularly aggressive, bringing the issue up with President Donald Trump in April.

To contact the reporter on this story: Evan Weinberger in New York at eweinberger@bloomberglaw.com

To contact the editor responsible for this story: Michael Ferullo at mferullo@bloomberglaw.com

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